Stop Looking For Money From VCs, Families, And Banks

One of the major obstacles entrepreneurs face in starting a business is raising the money they need. It can be the most time-consuming, frustrating and disheartening factor in launching a new venture.

Save yourself some energy and angst by not looking to sources that conventional wisdom would suggest as logical places to find startup capital. Instead, focus on more realistic prospects.

Here is a list of places you shouldn't be looking for money, followed by where you're more likely to find it:

Banks At first blush, bypassing banks may sound crazy -- that’s where the cash is. Banks also offer one of the least-costly sources of funding.

But banks generally are not interested in lending to start-ups. They seek out established borrowers with a credit history that can help them determine their risk and the probability of being paid back.

No matter their lending criteria, which can vary, banks won't lend to a start-up in most cases unless the principals sign a personal guarantee and have assets to back up the loan in case of default.

Bankers focus on the negative side of new ventures: How can I recoup my money if the business fails? Their depositors do not expect them to risk their money. For this safe approach, depositors are satisfied to receive a lower return on their money.